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It’s Time to Tax Brown

Brown university’s administration is probably wishing it had taken Mayor Taveras’ back-room deal when it had the chance. While accepting the agreement would have cost Brown at least $4 million more per year in contributions to the city, it would have avoided provoking a very public debate about why that number isn’t much higher. Brown, an elite institution with a $2.5 billion endowment, is not currently legally obligated to pay any property taxes, even on its income-earning properties. And so, ever since the news broke in early January that Brown had rejected the city’s request, the question has shifted from “why won’t a benevolent in- stitution like Brown give more money to the city?” to “why aren’t we taking that money from them in the form of property taxes?”

According to a recent investigation by Stephen Beale for GoLocalProv.com, Brown enjoys a unique status, even relative to the eight other universities, colleges, and hospitals from which Mayor Taveras is also seeking increased payments. Because Brown’s 250-year-old charter declares, “the College estate … shall be freed and exempted from all taxes,” Brown skirts the exceptions that usually apply to property owned by non-profits. These exceptions include property larger than one acre, and property not used directly for educational purposes; for example, 121 Main Street, a section of which Brown rents out to Hemenway’s Restaurant. As a result, Brown “voluntarily” pays a mere $1.6 million in property taxes. If it didn’t enjoy any pre-1776 exemptions, it would owe at least $4.6 million under the current policy; if Brown were fully taxed on all its properties, the bill would be more than $38 million annually. Taveras just wants 25% of this last figure— a little less than $10 million a year. In an attempt at damage control, Marisa

Quinn, spokesperson for the Brown President’s Office, cites the fact that Brown does pay taxes on more recently acquired, income-producing properties. However, according to the agreement Brown reached with the city in 2003, those properties do, eventually, cease to be taxable. Brown will make “voluntary contributions . . . according to an agreed-upon schedule: five years at 100 percent of the property’s existing taxes at the time of purchase; five years at 66.67 percent and five years at 33.33 percent.” After fifteen years of ownership, all of Brown’s properties are ulti- mately removed from the city’s tax rolls, potentially permanently.

In fact, it seems the university doth protest a little too much. A letter— released on January 13, 2012, by the Brown president’s office— a) chastises the city for its “high employee and re- tiree costs”; b) points readers to Brown’s “current contributions” (which include employing people, hiring construction companies, and having students who do volunteer work); c) suggests the city follow Brown’s lead by laying off workers and freezing pay; d) offers to pay $2 million more a year for five years; e) says “we really don’t have as much property as people think”; f) points out that Providence gets money from other institutions and from the state; and g) argues that Brown contributes to Providence by providing stable employment (see “c” above).

But most companies employ people, contract with other local companies, have employees that do community service, and also, in fact, pay property taxes. The real PR problem for Brown lies less in dispelling myths about what it “actually” contrib- utes to the community than in convincing the average person that it is not a contradiction in terms for Brown, tax-exempt because it is a “nonprofit,” to have administrators (and Goldman Sachs board members) on its payroll that make hundreds of thousands of dollars, while providing a service so expensive that the vast majority of Providence residents can’t begin to afford it.

Brown is a corporation, and like any other corporate entity that has to compete for its market share, Brown shorts the city because exploiting tax loopholes makes good business sense. This is why it shouldn’t be up to Brown whether or not it pays for the city services it uses. Brown should be taxed, just like the rest of us.

So what do we do? We can support the city council members who are pursuing changes in legislation that would require property tax payments, and we can put pressure on Brown to make bigger “voluntary contributions” in the meantime. We need more pickets like the one on January 12, 2012, when over one hundred Providence residents, including city workers and students, picketed outside 121 Main Street.

In addition, we have to recognize that the students, faculty and staff of Brown Univer- sity are not automatically the bad guys. In fact, most staff and faculty members would benefit just as any other resident would, from Brown ponying up its share; and students have long been a radical force in society, helping to pressure institutions from the inside. Everyone who believes in economic justice should join this fight— and we should welcome them.